Choice Hotels International, Inc. v. MAA Laxmi, LLC et al

Filing 10

MEMORANDUM OPINION. Signed by Judge Paula Xinis on 3/29/2017. (kns, Deputy Clerk)(c/m 3/29/17)

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-,FlED
--""OOCBl

.ENltRED
.IlCEIVED

MAR 2 9 Z017

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

*
CHOICE HOTELS INTERNATIONAL.

INC.

*
Plaintiff.

*
Civil Action No. PX 16-2322

v.

*
MAA Laxmi. LLC.

el

al.

*
*

Defendants

******
MEMORANDUM

OPINION

Pending before the Court is Plaintiff Choice Hotels International,
"Plaintiff')

Application

Judgment.

ECF NO.8.

judgment

Inc:s ("Choice" or

to Confirm Arbitration Award, ECF No. I, and Motion for Default
For the following reasons. Choice's

request for this Court to enter default

in the amount of$12 1.789.79 is GRANTED.

I.

Background

On October 18.2016. Choice filed its Motion to Confirm Arbitration Award, ECF No. I.
after having obtained a judgment

against Defendants MAA Laxmi. LLC ('"MAA Laxmi"),

Jaycsh Bhakta. Kasmira Bhakta, and Sachin Bhakta. collectively. "Defendants."
proceedings.

in arbitration

Choice and Defendants had entered into a franchise agreement on December 22,

2006 that provided for arbitration as its dispute resolution mechanism for breach of the
agreement.

ECF No. 1-3. Choice initiated arbitration proceedings

attended. On March 2, 2016, an "Ex Parte Award of Arbitrator"
$121. 789.79 representing

"outstanding

which none of the Defendants
issued in the amount of

invoices dated from January 12. 2012 through December

13. 2012:' "'lost profits".'

interest charges on unpaid invoices. as well as administrative

fees and

expenses. ECF No. 1-2 at 2.
Jayesh Bhakta and MAA Laxmi were properly served on July 13.2016. ECF NO.4.
Kasmira Bhakta was properly served on August 4.2016.
properly served on September

15,2016,

ECF NO.5. and Sachin Bhakta was

ECF NO.6. Defendants failed to respond to Choice's

Motion or otherwise contest Choice's claims. Choice then moved for entry of Default, ECF No.
7. and Default Judgment.

ECF NO.8.

Defendants did not respond to these motions, and the

Clerk entered default on February 3. 2017. ECF NO.9.
II.

Standard

of Review

Pursuant to Federal Rule of Civil Procedure 55(a), "[wJhen a a party against whom a
judgment

for affirmative relief is sought has failed to plead or otherwise defend, and that failure

is shown by affidavit or otherwise. the clerk must enter the parties default." Fed. R. Civ. 1'. 55(a).
Thereafter.

the court may enter default judgment at the plaintiffs

request and notice to the

defaulting party. Fed. R. Civ. P. 55(b)(2). Plaintiff, however, is not automatically
default judgment
judgment

entitled to

simply because the defendant has not responded. Rather, entry of de fault

is left to the sound discretion of the court. See. e.g., Choice Hotels International. Inc.

.fa I Shree Nal'{lurga. LLC. DKC 11-2893.2012

I'.

WL 5995248. at *1 (D. Md. Nov. 29, 2012); see

also Choice Hotels International. Inc. v. Austin Area Ho.\]Jitality.Inc.. TDC 15-0516,2015

WL

6123523. at *1 (D. Md. Oct. 14.2015). Although the Fourth Circuit has announced a "'strong
policy" in favor of deciding cases on their merits, United States v. Scha.tfer Equip. Co., II F.3d
450.453

1

(4th Cir. 1993). a default judgment

may be appropriate when a party is unresponsive.

The arbitralor awarded "S57.816.00 for room charges at the rate of $40 per room per month for 21.9 months for 66

rooms as lost profits:' ECF No. 1-2 at 2.

2

s.E.c. V. Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005) (citing./ackl"On v. Beech, 636 F.2d
831, 836 (D.C. Cir. 1980».
III.

Analysis

A plaintifTmoving for default judgment "must show that it is entitled to confirmation of
the arbitration award as a matter of law." Choice, 2012 WL 5995248, at *2 (collecting cases).
The Federal Arbitration Act. 9

U.s.c.

* 9, provides that "at any time within one year after the

award is made any party to the arbitration may apply to the court so specified for an order
confirming the award, and thereupon the court so specified for an order confirming the award."
Here, Plaintiff filed its motion for confirmation within one year. Section 9 further provides that
this Court must grant the order unless the award is modified. vacated or corrected pursuant to
sections I0 and II of the same Act. [d.
Review of an arbitration award is "severely circumscribed" because to allow for a more
expansive review would "frustrate the purpose of having arbitration at all-the

quick resolution

of disputes and the avoidance of the expense and delay associated with litigation." Apex
I'lulllbingSupply.

[nco V.

u.s. Supply

Co.. [nc., 142 FJd 188, 194 (4th Cir. 1998). Accordingly.

this Court may vacate an arbitration award based on one of the grounds enumerated in the
Federal Arbitration Act or if the arbitrator acted in manifest disregard of law.

[do

Neither are at

issue here.
Rather, the instant arbitration clause in the franchise agreement specifically provides for
final and binding arbitration for any "controversy or claim arising out of or relating to" the
franchise agreement.

Ecr No.

1-3 at I. Although Choice's motions do not expressly identify

where arbitration was held, the Franchise Agreement makes plain that it would take place in
Maryland, and the arbitration award confirms the proceedings were held "in accordance with the

3

arbitration agreement entered into" between Plaintiff and Defendants. ECF No. 6-2; see also
Defendant's

Motion for Default Judgment. ECF NO.8 at 3 ("The arbitration was conducted in

accordance with the terms of the parties' Arbitration Agreement.").

The parties are also diverse.

and the amount of the arbitration award for which the Plaintiff seeks confirmation
jurisdictional

minimum for diversity jurisdiction

exceeds the

in this Court. See 28 U.S.c. ~ 1332(a). The

pleadings before this Court. therefore. demonstrate

that the arbitration award can and should be

confirmed.
The arbitrator awarded Plaintiff$121.789.79.
franchise fees. $24.230.71
administrative

in

in interest. $57,816.00 in liquidated damages, and $9,012.50 in

expenses and arbitrator compensation.

default judgment
this action:'

which was comprised of$30,730.58

ECF No. 1-2. Plaintiff requests entry of a

in that amount. "plus post-judgment

interest until paid and $400 for the costs of

ECF NO.6. The Court grants entry of$121,789.79

Plaintiff requested the same in its initial petition for confirmation

plus $400 in costs because
of the arbitration award. ECF

No. I. See Fed. R. Civ. P. 54(c). Insofar as Plaintiff seeks reimbursement

for post-judgment

interest, such is awarded by operation of law and not by Court order. See 28 U.S.c. ~ 1961(a);

Choice. 2012 WL 5995248. at *4. Plaintiff has demonstrated that it is entitled to the remaining
requested award and a default judgment
IV.

in that amount will be entered.

Conclusion

For the above-stated

reasons, Plaintiff Choice's motion for default judgment

scparate order will follow.

3/29/2017
Date

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Paula Xinis
United States District Judge

4

is granted. A